Thyroid nodules, a common problem in clinical practice, are usually benign; only about 5% of these nodules harbor malignancy. The first step in evaluation is measurement of serum TSH levels. When the TSH value is suppressed, a hyperfunctioning nodule is likely, and scintigraphy may be helpful for confirming the diagnosis. Because thyroid cancer is extremely rare in "hot" nodules, such a finding is reassuring. Observation alone or treatment with radioiodine is a reasonable alternative to surgery in many of these patients. Fine-needle aspiration biopsy is the single most important procedure for differentiating benign from malignant thyroid nodules, and its role in evaluation and management of nodular thyroid disease cannot be overemphasized. Ultrasound, scintigraphy, and radioiodine scanning, together with measurement of various tumor markers, are useful adjuncts in the preoperative and postoperative management of patients with thyroid cancer. A carefully thought-out management plan can help reduce the risk of unnecessary surgery in these patients.